OST-95-911 / Korean Air Lines / Korea-Saipan / Reply of Korean to World / March 16, 1998

Application of

for an exemption from 49 U.S.C. S41301

(Korea - Saipan)

TO ANSWER OF WORLD AIRWAYS, INC.

In support of its Reply, KAL respectfully states as follows:

1. When stripped of its rhetoric, /1 World's answer does not raise any issues that have not already been addressed by the Department in dealing with several applications submitted by KAL in the last twelve months or so. /2 The fundamental thrust of World's objection is its claim that the Government of the Republic of Korea has not allowed World to institute new scheduled all-cargo service in the U.S.-Korea market with beyond service from Korea to Malaysia. While KAL does not have firsthand knowledge of the discussions between World and the Korean civil aviation authorities regarding this matter, KAL understands that the service proposed by World would have replaced a service that was previously operated by a non-U.S. carrier pursuant to a wet lease agreement with World. KAL also understands that the Korean Government raised what appear to have been legitimate questions regarding such an operation and -- more

1/ World's carping about whether KAL's application contains the requisite "public interest" showing is completely without merit. As demonstrated in its application, renewal of KAL's Saipan authority is fully consistent with the Korea-U.S. bilateral and would benefit the traveling and shipping public. Moreover, the Department has found the issuance/renewal of such authority to be in the "public interest" on at least two previous occasions. There is nothing in World's filing which would support a contrary conclusion.

2/ While KAL's application referenced the prior approvals and consistency with the Air Transport Agreement, KAL also states to the Department that granting this renewal application is consistent with the public interest.

than a year ago -- requested additional information from World regarding the proposed new service. KAL further understands that World has yet to respond fully to the Korean Government's request. If such is the case, then World should not now be heard to complain of delay when World itself may have been less than forthcoming in responding to the Korean Government's request for additional information.

2. As the Department noted last year when it renewed the very authority at issue in this docket, the issues that World has raised can more appropriately be addressed through other means. On the positive side, KAL understands that there may have been recent informal conversations between the two governments that could lead to a resumption of discussions between the United States and the Republic of Korea over a possible "Open Skies" agreement. If that should prove to be the case, such discussions would offer an opportunity for both sides to review and resolve the issues that World has raised. In the meantime, however, there is no basis for taking action that could result in the elimination of the authority granted to KAL to provide services in the Korea-Saipan market.

WHEREFORE, Korean Air Lines Co., Ltd. requests the Department to renew its Korea-Saipan exemption authority pending in Docket OST-1995-911 for a period of one year or more.

Respectfully submitted,

Herbert A. Rosenthal

HERBERT A. ROSENTHAL, ESQ.

HERBERT A. ROSENTHAL, CHTD.

Attorney for KOREAN AIR LINES CO., LTD.

Dated: March 16, 1998